Fintech firm settles with SEC over crypto lending product

Linus Financial has agreed to stop offering its retail crypto lending product as part of the settlement

article-image

Billion Photos/Shutterstock modified by Blockworks

share

Linus Financial, a Tennessee-based financial technology company, has settled with the US Securities and Exchange Commission for alleged securities laws violations.

Linus agreed to stop offering its retail crypto lending product. Per the settlement agreement, Linus Financial opted to neither confirm nor deny the charges, the SEC said Thursday. 

According to the regulator, Linus offered its retail crypto lending product between March 2020 and April 2022. 

Linus converted tendered assets into USDC and either transferred the USDC into liquidity pools on decentralized finance platforms or directly lent the USDC to institutional borrowers to generate returns for retail investors. Interest rates were generally between 3.5% and 4.5%, the SEC said

The SEC claims that the retail product contained an investment contract, thus subjecting it to laws under the Securities Act. 

In March 2022, after increased regulatory scrutiny on the crypto lending industry, Linus opted to unwind its retail product, directing investors to withdraw funds and closing the offering to new investors. All investor funds had been claimed by late April 2022, the regulator said. 

In light of Linus’ proactive decision to halt the product in 2022, on Thursday, the SEC said it would not be imposing civil penalties against Linus, instead opting to issue a formal cease and desist to the company from offering the product again. 

Stacy Bogert, associate director of the agency’s Division of Enforcement, said that “[t]he SEC will continue to hold companies accountable for failing to comply with federal securities laws.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

4.png

Research

This months PPGC covered four main areas. Firstly, debriefing the progress and status of the mainnet implementation of the Ahmedabad hard fork. Secondly, a retrospective on the testnet phase of the Ahemdabad Hard Fork. Thirdly, an update on PIP-36 which involves replaying failed state syncs. Lastly, PIP-47 which pushes upgrades to the Polygon Protocol Council.

article-image

Institutions to test out the settlement of “digital assets and currencies” on a network that annually carries more than 5 billion financial messages

article-image

After Bitwise’s XRP ETF filing this week, one industry watcher notes: “Politics will determine whether this happens soon or in a few years”

article-image

Plus, a look back at some of the SEC’s biggest enforcement moves under Gurbir Grewal

article-image

The forward-looking financial system is being championed by several contributors to India’s UPI digital money system

article-image

Multiple teams are pursuing integration cross-chain and off-chain

article-image

An SEC spokesperson told Blockworks the Ripple judgment clashes with Supreme Court precedent and securities laws